Monday, April 27, 2009

$1 Billion A Day

Exactly how do increased Medicaid and Tax Relief payments stimulate the economy?


$1 billion a day for stimulus
Posted: 12:59 PM ET
From

A CNNMoney.com analysis of the program's financial reports shows how difficult it is to quickly inject billions of dollars into the economy.

NEW YORK (CNNMoney.com) - The federal government has made available more than $75 billion for stimulus projects in the 10 weeks since President Obama signed the $787 billion recovery package into law.

Not all of that money has hit the streets, however. So far, $14.5 billion has been spent, nearly all of it to help states cope with rising Medicaid costs.

A CNNMoney.com analysis of the program's financial reports shows how difficult it is to quickly inject billions of dollars into the economy. Experts interviewed said they are not surprised by the pace of spending, though they had mixed views on whether the effort would boost the economy.

"There's a natural tension between using taxpayers' money in a prudent way and getting the money out the door quickly," said Isabel Sawhill, a Brookings Institution senior fellow.

The massive recovery package was designed to stimulate the economy and create jobs, as well as assist states and people suffering from the recession by providing funding for education, Medicaid and other public services.

The federal government is now tasked with putting $499 billion to work in coming years. The remaining $288 billion consists of tax relief, the signature program of which, the Making Work Pay credit, began earlier this month.